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LONDON-Construction costs in the UK are soaring ahead of inflation, according to the latest RICS tender price index compiled by the Building Cost Information Service. In the year to 31 March 2001, tender prices rose by 7.0% compared with a general inflation rate of 2.2%. Materials costs rose 1.8% in the past year while construction wage rates rose 5.9%.

However, there are signs that the pressure may be easing. There was a considerable fall in orders in the second half of 1999, which is now translating into a slowdown in site activity. Next year, new work is likely to recover and total construction output is expected to rise in 2001 and 2002.

Peter Rumble of BCIS says: ‘Tender prices are expected to increase faster than inflation over the next two years due to rising input costs and the increase in new work output in 2002. However, if the economic slowdown in the US has an adverse effect on the UK economy, this may have a dampening effect on tender price increases.’

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